Ascendis Pharma A/S Q3 FY2020 Earnings Call

Thank you for joining us for the Third Quarter 2020 Ascendis Pharma Earnings Conference Call. All participants are currently in listen-only mode. I would now like to turn the call over to Scott Smith, Senior Vice President and Chief Financial Officer at Ascendis Pharma. Please proceed.

Thank you, operator. Thank you, everyone for joining our third quarter 2020 financial results conference call today. I’m Scott Smith, Chief Financial Officer of Ascendis. Joining me on today’s call are Jan Mikkelsen, President and Chief Executive Officer; Dr. Mark Bach, Head of Clinical Development and Medical Affairs for Endocrinology Rare Diseases; Jesper Høiland, Global Chief Commercial Officer; Dr. Dana Pizzuti, Head of Development Operations; and Dr. Juha Punnonen, Head of Oncology. Before we begin, I would like to remind you that this conference call will contain forward-looking statements that are intended to be covered under the Safe Harbor provided by the Private Securities Litigation Reform Act. Examples of such statements may include, but are not limited to, our progress on our pipeline candidates and our expectations with respect to their continued progress, statements regarding our strategic plans, our goals regarding our clinical pipeline, statements regarding the market potential of our pipeline candidates and statements regarding our regulatory filings. These statements are based on information that is available to us today. Actual results or events could differ materially from those in the forward-looking statements, and we may not achieve our goals, carry out our plans or intentions or meet the expectations or projections disclosed in our forward-looking statements, and you should not place undue reliance on these statements. Our forward-looking statements do not reflect the potential impact of any licensing agreements, acquisitions, mergers, dispositions, joint ventures or investments that we may enter into or terminate. We assume no obligation to update these statements as circumstances change, except as required by law. For additional information concerning the factors that could cause actual results to differ materially, please see the forward-looking statements section in today’s press release and the Risk Factors section of our prospective supplement filed on July 9, 2020. Please note that our TransCon product candidates are investigational product candidates and are not approved for commercial use. As investigational products, the safety and effectiveness of the TransCon product candidates has not been reviewed or approved by any regulatory agency. None of the statements made on the conference call regarding our TransCon product candidates shall be viewed as promotional. On today’s call, we will discuss our second quarter 2020 financial results and provide a business update. Following some prepared remarks, we will then open up the call to questions. I will now turn the call over to Jan Mikkelsen, our President and Chief Executive Officer.

Thanks, Scott, and good afternoon, everyone. We are now almost at 2020, which has been again, a very transformative and successful year for Ascendis. Now, 11 months into 2020, we have met or exceeded all our cohort goals to date. We have advanced our clinical programs, bringing them closer to addressing major unmet needs for patients, and we have built out our first two product opportunities in oncology that have the potential to represent a new paradigm shift in treating patients with cancer. Why are we able to execute in this manner day-in and day-out? It is because we are a company accommodated by the following fundamentals: Ascendis’ three core values; the patients, science, and passion. The power of TransCon technology. A clear vision, and a long-term strategic mindset on how to build a sustainable biopharma company. People ask me, how do you motivate Ascendis’ employees to take our meetings with colleagues at 6:00 AM in the morning or stay up until midnight to speak with our patient group? My answer is it is not me that motivates our people. It is the core values of Ascendis. We put the patient first to drive our decision-making. Everything we do is to develop product opportunities that address unmet medical needs for patients as fast as possible. We are dedicated to using science and biological understanding built by the scientific community over many decades to guide our patient focus and decisions. And finally, we are passionate about realizing our shared vision and goals. We trust these other strengths and when we are facing challenges, we remain optimistic and commit to work together as one team to achieve extraordinary results. What enables Ascendis to develop a continuous flow of diversified, highly-differentiated product opportunities with a high probability of success as demonstrated by our clinical results? It is the power of the TransCon technology platform and our dedication to science. We have already demonstrated clinical validation of the TransCon technology in three independent endocrinology rare disease programs. Combining our TransCon technologies, the clinically validated parent drug has allowed us to harness well-known biology and the power of Mother Nature to deliver highly-differentiated product opportunities with a high probability of success. We believe we’re just getting started with TransCon, and that we have a real opportunity to transform patient lives. Now, we are embarking on applying this successful approach and our unique algorithm for product innovation to create potential high-value product candidates in multiple therapeutic areas and we are now getting ready to enter the clinic in oncology. TransCon is a unique technology approach compared to other technologies. At Ascendis, we can create highly-differentiated product opportunities, not possible by other technologies; and at the same time, we have expected high clinical development success, as we are building on scientifically validated biological pathways and the parent drug. Last, the value of having a strong vision and a strategic mindset with a clear direction on how to build a sustainable long-term value company is essential for success. Our pipeline strategy has been a key part of our successful vision. The first fundamental in our pipeline strategy is to focus on large orphan drug product opportunities that address Ascendis’ unmet medical need, where the TransCon technology can make a major difference. The second fundamental is that we must build multiple product candidates in each of our therapeutic areas in order to achieve synergies, economy of scale, and realize the huge advantages from our therapeutic focus in clinical development, regulatory affairs, medical affairs, and commercialization. We believe that combining these two elements provides the foundation for creating economies of scale, achieving long-term sustainable growth for highly-differentiated products, and building and leading a biopharma company. Our current vision, Vision 3x3, provides clear direction and strategic goals year-by-year on how we want to build a long-term sustainable leading biopharma company through multiple approaches. I must say the results we have delivered to date by pulling all these things together—our values, our TransCon technology, and our Vision 3x3—have exceeded my expectations. Not only do we continue to execute year-by-year, quarter-by-quarter, we have accomplished what many companies have tried and failed to do. We continue to push ourselves to deliver, not only in endocrinology rare diseases but also in oncology, where I truly believe we have the opportunity to transform the treatment of cancer. We are planning an investor call later this month to share more with you about our vision and strategy in oncology and our latest progress. Let me review some of our important achievements in this quarter. Let me start with TransCon Growth Hormone or lonapegsomatropin. All science tells us that growth hormone needs to remain unmodified to achieve the same mode of action as daily growth hormone, the same as endogenous growth hormone, and you have heard us say this for years. The recent data updates and FDA reviews of long-acting growth hormone analogs further confirm the science and demonstrate that you cannot cheat nature. If you modify a hormone, you will modify its effect, which comes with consequences. We believe TransCon Growth Hormone may provide a major improvement to daily growth hormone therapy, an alternative that maintains the mode of action of daily growth hormone, addresses all endocrine health, and provides convenient weekly administration. Together, this benefit could potentially lead to better outcomes for patients and an expansion of the growth hormone market. In Europe, we submitted our first M&A filing for TransCon Growth Hormone for the treatment of Pediatric Growth Hormone Deficiency ahead of schedule. Our submission followed the agreement of EMEA to all proposed Pediatric Investigation Plan or PIP covering children from six months to less than 18 years of age. We are pleased by the EMEA decision, because we believe it reflects the unique product feature of lonapegsomatropin, which enables the long-acting release of unmodified somatropin. To our knowledge, the approval of our PIP is the third time that the European Committee responsible for overseeing pediatric drug development programs has concluded that a development program for a long-acting growth hormone treatment supports clinical development in children. In the U.S., we received notice that the FDA accepted our PLA filing for TransCon Growth Hormone for the treatment of Pediatric Growth Hormone Deficiency, and we now have a PDUFA date of June 25, 2021. We were pleased to hear that there were no filing issues and we look forward to continuing to engage with the FDA during its review. We have also completed and submitted the routine data 120 safety and efficacy update from the enliGHten Trial. We are pleased to report that of the 306 children treated with TransCon Growth Hormone in our Phase 3 program, 160 children have completed at least two years of therapy, and more than 140 children in the U.S. have now been using our novel auto-injector for at least 26 weeks successfully. With this updated safety assessment, we can report that all safety profiles have remained consistent with what was reported with the original PLA filing. There are certain safety profiles that continue to be comparable to those observed for daily growth hormone, and no safety information has been identified that would negatively impact the benefits-risk profile of TransCon Growth Hormone. Updated efficacy analysis showed that the analyzed high velocity was within the expected range for second-year therapy, indicating long-term efficacy with continued treatment. Building on our objective of creating global clinical reach, we recently announced the filing of a clinical trial notification with the PMDA in Japan, ahead of schedule, to initiate our Phase 3 riGHt Trial for the treatment of Pediatric Growth Hormone Deficiency. The riGHt Trial will randomize treatment-naïve children with growth hormone deficiency in a one-to-one manner to TransCon Growth Hormone or daily growth hormone. As with our pivotal heiGHt Trial, the primary efficacy endpoint is analyzed high velocity at week 52. Our third arm will include treatment experience of children with growth hormone deficiency. The trials will be conducted entirely in Japan. The target enrollment is 40 subjects in the treatment-naïve population and more than 10 subjects in the switch arm. An opportunity to continue in an extension phase will be offered. I’m also pleased to tell you that the global foresiGHt Trial of TransCon Growth Hormone in adult growth hormone deficiency is progressing as planned. In adults, we measure body composition, fat mass, lean mass, etc. We believe that TransCon Growth Hormone will perform well compared to daily growth hormone. Finally, the commercial team continues the planning preparation for the expected launch of TransCon Growth Hormone as quickly as practical after approval. During the coming months, we look forward to keeping you updated about the progress of Ascendis’ first commercial launch and our vision of how to develop TransCon Growth Hormone to become the leading growth hormone product in the global growth hormone market. Turning to TransCon PTH. For TransCon PTH, we submitted ahead of schedule an amendment to our IND with the FDA for the PaTHway Phase 3 clinical trials, evaluating safety, tolerability, and efficacy of TransCon PTH in adults with hypoparathyroidism or HP. We have also submitted regulatory filings to enable the initiation of European and Canadian sites for PaTHway. The PaTHway trial is a six-month randomized, double-blind, placebo-controlled trial with an open-label extension period, similar to our Phase 2 trial. We plan to enroll about 76 adults with chronic HP, who are currently on standard of care, randomized in a three-to-one fashion to TransCon PTH versus placebo. At the same time we initiate the PaTHway Phase 3 trial, we announced the preliminary six-month results from the open-label extension portion of the Phase 2 PaTH Forward trial. PaTH Forward is a global Phase 2 trial evaluating the safety, tolerability, and efficacy of TransCon PTH in adult subjects with HP. The results were better than we could have possibly hoped. These data indicate that TransCon PTH can eliminate standard of care treatment for HP, since 100% of patients were able to remove active vitamin D, and 91% of patients were able to stop both active vitamin D and therapeutic calcium supplements. In addition, and important for the patients, our results demonstrate continuous improvement in measures of quality of life in TransCon PTH treated subjects using SF-36. For those subjects, who initiated PaTH Forward on the placebo arm, when they switched to TransCon PTH, they were also able to normalize certain scores and domains on the SF-36. Turning to TransCon CNP. The ACcomplisH trial is proceeding as planned. Today, we are announcing the filing in collaboration with VISEN Pharmaceuticals of IND to initiate the Phase 2 ACcomplisH China trial of TransCon CNP. The ACcomplisH China trial is a Phase 2 randomized, double-blind, placebo-controlled trial evaluating the safety, efficacy, and pharmacokinetics of multiple subcutaneous doses of TransCon CNP administered once weekly. The primary objectives of the clinical trial are to determine the safety and growth velocity of TransCon CNP in infants and children under 11 years of age with achondroplasia and include cohort expansion of optimal doses. All subjects who completed the trial will have the opportunity to receive TransCon CNP in a long-term extension trial. Moving to our second therapeutic area, oncology. We remain on track to achieve our final corporate goal of the year to file an IND or similar for TransCon TLR7/8 Agonist in April. On November 20, we are looking forward to hosting a virtual call on current quality, resource, and development data, where we will provide an update on our vision in oncology and an update on our two most advanced pipeline candidates, TransCon TLR7/8 Agonist and TransCon IL-2 beta/gamma. We will share our vision to create potential best-in-class oncology therapeutics. By the time of our submission, we will be leveraging our systemic and inter-tumor TransCon technologies to clinical validated parent drugs and biological pathways. As we continue to execute our clinical programs, we continue to build out our global clinical development and medical affairs capability with the hiring of Dr. Mark Bach. Mark joined as Senior VP of Clinical Development and Medical Affairs for Endocrinology Rare Diseases and will report to me. Mark is a pediatric endocrinologist with 30 years of experience building a leading clinical team that has successfully launched multiple pharmaceutical products into global markets, including Amgen and Merck. Mark’s experience managing global clinical programs across Europe, Asia, and North America aligns well with our Vision 3x3 of establishing global clinical pathways to bring our endocrinology rare disease product candidates to market as fast and as safely as possible. Each of the milestones we have achieved this quarter and throughout the year represent significant elements of the company’s Vision 3x3, our vision to create long-term sustainable growth. Our mission is to develop a pipeline of multiple innovative therapeutics, not just a single product opportunity. We have a powerful technology platform that we can apply to create multiple product opportunities in multiple therapeutic areas. But all these product opportunities have in common that they can truly address unmet medical needs. That is what motivates us and drives us—seeing our therapeutics providing benefits to patients, improving clinical outcomes, and striving to bring them to the patients as fast as possible. This is my measure of success, and I think we can truly consider ourselves successful in achieving our goals to date. We look forward to sharing more with you as we move ahead in 2021, to advance endocrinology rare disease product candidates to patients and bring our quality pipeline into the clinic. Now, let me turn the call over to Scott for a financial review before we open up for questions.

Thank you, Jan. Turning to our financial results for the quarter ended September 30, 2020, we reported a net loss of €121.7 million or €2.31 per basic and diluted share compared to a net loss of €25.1 million or €0.53 per basic and diluted share during the same period in 2019. Now, let me run through some of the key components of these results. Research and development costs for the third quarter were €64.1 million compared to €46.3 million during the same period in 2019. The increase in R&D costs reflects continued advancement of our pipeline with the primary drivers, including an overall increase in personnel and R&D infrastructure costs. For TransCon hGH or lonapegsomatropin, costs were higher due to manufacturing product supply as well as increased clinical trial activities. As a reminder, we currently expense manufacturing costs of lonapegsomatropin as R&D in advance of our anticipated product launch. At the time of product approval, a portion of these R&D costs may be reversed and capitalized as inventory, which will result in a one-time benefit to R&D costs. For both TransCon PTH and TransCon CNP, costs were higher primarily due to increased manufacturing, device development, and clinical trial costs. And finally, costs were higher due to the continued build-out of our oncology therapeutic area. Selling, general, and administrative expenses for the third quarter were €17.5 million compared to €10.0 million during the same period in 2019. The higher costs primarily reflect an increase in personnel-related IT and other infrastructure costs as well as those associated with the continued build-out of our commercial capabilities. Financial income and expenses include an unrealized loss of €39.6 million, compared to an unrealized gain of €27.4 million during the same period in 2019, due to foreign currency exchange rate fluctuations, primarily on our U.S. dollar holdings of cash and marketable securities. We ended the third quarter with cash, cash equivalents, and marketable securities totaling €957.5 million. As Jan detailed out, we continue to execute on our goal of building a leading biopharma company with a diverse pipeline of potential high-value product candidates in multiple therapeutic areas. The combination of our values, our validated TransCon technologies, and our strategic Vision 3x3 has allowed us to deliver unique product candidates and clinical results with an expected high probability of success that you have seen first in endocrinology rare diseases, and we look forward to sharing more with you about our oncology therapeutic area. We remain on track to achieve our final corporate milestone for 2020 of submitting our first oncology IND or similar filing in December for our TransCon TLR7/8 Agonist, and we look forward to sharing progress on the rest of our pipeline over the near-term, including for lonapegsomatropin. Continued execution of the enliGHten trial, our ongoing long-term Phase 3 extension trial of subjects who completed the heiGHt and fliGHt trials. Continued execution of the foresiGHt trial, a global Phase 3 randomized controlled clinical trial in adult GHD and execution of the riGHt trial, a Phase 3 randomized controlled clinical trial in pediatric GHD in Japan. For TransCon PTH, continued execution of the Phase 2 PaTH Forward trial, which continues to retain 58 subjects in the open-label extension. Execution of the PaTHway Trial, a North American and European Phase 3 randomized controlled clinical trial in adult hyperparathyroidism, and further global clinical reach and label expansion for TransCon PTH in 2021. For TransCon CNP, execution of two randomized controlled Phase 2 clinical trials in achondroplasia: the ongoing ACcomplisH trial and the ACcomplisH China trial, which is being conducted due to our strategic investment in VISEN Pharmaceuticals, for which we recently filed an IND. And lastly, in our oncology therapeutic area, as mentioned, we plan to submit our first oncology IND or similar filing in December of this year for our TransCon TLR7/8 Agonist, followed by an IND or similar filing for TransCon IL-2 beta/gamma in 2021. With our extensive clinical development programs, the recent addition of Dr. Mark Bach to our team has strengthened our ability to achieve global market leadership with the advancement of our endocrinology rare disease portfolio and the future potential launch of our product candidates if approved. We look forward to seeing you all virtually at our upcoming Oncology Research Day on Friday, November 20 at 12 noon Eastern Time. Operator, we are now ready to take questions.

Thank you. Our first question comes from Jessica Fye with JPMorgan. You may proceed with your question.

Hey guys. Good afternoon. Thanks for taking my questions. As we approach the launch for TransCon Growth Hormone, can you share a little more about how you’re thinking about the commercial strategy? Do you anticipate being able to launch immediately post-approval, or should we think about any lag for whatever reason and how should we think about the timeframes within which you’ll be able to get on commercial plans?

Thank you. It’s always great to hear you. And first of all, I’m really pleased to have Jesper here in the room. So, he can take away some of the questions, but I think what we have said currently, and this is what we are executing on now, and this is what we have shared for you, is our plan for the U.S. So, when Jesper talks, he will mainly be focused on the U.S. and we will, in later stages, come out with how we really are going to execute also in the upcoming hopeful expected European approval, which we actually are seeing some way coming near now. So Jesper, will you tell us about the overall strategic plan related to the U.S. market?

Absolutely, thanks for the question, Jessica. I have spent more than 30 years in the area of endocrinology and growth hormone. I can only say I’m super-excited about the lonapegsomatropin opportunity that we’re having in the U.S. I certainly think it could be transformational going from once-daily to once-weekly, which is what all patients and parents look forward to. We are in the process of hiring the people to be ready to launch shortly after the PDUFA date, which is June 25 next year, as you know. So shortly thereafter, we will hopefully be up and running with the entire team. The level of management under me is in place, and we are recruiting according to the plan, and we will certainly be completely ready and full of energy when we come to the market. As you know about the commercial strategy, commercial is the commercial market; that’s what it’s all about in this segment and that’s where we will be focusing. And of course, pricing, which I can already guess that someone will talk to, is that we will make that decision at the point of time of having the approval of the product before the launch.

Adding one comment to Jesper is that from the manufacturing perspective, yes, we are ready to launch exactly after we get our approval. We have the capacity, and we are producing the drug. We are there. So, we are not having a lag period, where we need to go out and start manufacturing for it is already established.

Great. Thank you.

Thank you. Our next question comes from Michelle Gilson with Canaccord Genuity. You may proceed with your question.

Hi. Thanks for taking my question. Could you maybe talk a little bit about the CNP trial and the overall program? The current ACcomplisH Trial is enrolling patients two years to 10 years old. Do you have plans to bring TransCon CNP into younger patients? And I guess how young would you anticipate you need to go to address more debilitating comorbidities associated with achondroplasia? And then could you remind us why CNP is the right approach in achondroplasia versus FGFR inhibition?

Thanks. Let me basically start from your last question. CNP has been known for 20 years or more. There has been extensive research on CNP. There has been extensive knowledge about how CNP can inhibit hyperactivation of signaling you have in the FGFR3 receptor in achondroplasia. It has been proven that if you have extensive concentration of CNP, there are patients that can have continued activation of NPR-B receptor or have high concentration of CNP. Just looking at all the knowledge we have from the scientific literature and what we have seen in our preclinical findings, CNP is an extremely safe molecule. The main effect of CNP is to provide in growth disorder, a possibility to overcome the hypersignaling pathway of the FGFR3 pathway in a safe manner. You can say also from a cardiovascular perspective, everyone knows that CNP is also preventing and protecting against cardiovascular diseases. It’s basically a multi-hormone that has a lot of benefits. The reason why the tyrosine kinase inhibitors have not been successful is because it's hard to make them specific enough. So, it’s really hard to develop a tyrosine kinase that will not show high levels of toxicity compared to the benefit-risk ratio. This is why we analyzed about five, six years ago, and we only saw one safe possibility which has been proven to be safe. Everything that we are seeing with CNP indicates it is a safe manner to control the hyperactive pathway of FGFR3. Going back to our overall program, somebody had said before you can conduct Phase 2 trials in different ways. You can have a single-arm trial and then compare to historical data and basically mitigate the risk from Phase 2 into a Phase 3 setting. What we did in this case here is that we had not only one Phase 2 trial, we had two Phase 2 trials. Both of them are placebo-controlled, double-blinded. This means that having two independent Phase 2 trials will allow us to analyze not just for efficacy but also for safety. We really believe that with our continuous exposure to CNP, we can witness major outcome improvements, not only through height, which is a parameter that is easy to measure, but we really want to address the comorbidities of this disease. This is why we are developing TransCon CNP, and we have now two independent Phase 2 trials. We have one that we call ACcomplisH China, which is cohort expansion, where you have an optimal dose and you will select a cohort with more patients when you have the optimal dose. The other plan is to go back down to newborn. Yes, this is also what we are filing on now, to have the opportunity to treat children from newborn. If we need to address the spinal stenosis element, we need to begin treatment as early as possible. This is the only way you can avoid the spinal fusion which happens in the first two years of life, and this is why we need to go down to newborns to address comorbidities.

So, have you—since you are initiating the phase 2 trial in China, have you chosen the doses that you were planning to expand?

We are still dose-escalating, and we are learning, and we want to ensure we do it right. That’s what we are doing now. We want to ensure that we see the right growth velocity, and the right safety before we go out to what I call broadly a cohort expansion. So, we are in a position that we’re following this trial month by month to be sure, and potentially, we would still enroll more cohorts to ensure that we have the optimal dose for treating this patient group.

Okay. Thank you so much for taking my questions.

Thanks, Michelle.

Thank you. Our next question comes from Joseph Schwartz with SVB Leerink. You may proceed with your question.

Hi, Andrew dialing in for Joe. Thanks for taking our question. My first one is on CNP – TransCon CNP. I was wondering what your thoughts are on the FDA possibly wanting two-year data in different age groups for achondroplasia based on the competitor’s filing? Assuming the FDA reviews your data, I was just wondering if this impacts your strategy for TransCon CNP?

This is a great question. The data suggests that if you have a small marginal effect, where you have one centimeter potential, it’s hard to see that it would continue over time, especially compared to a competitor’s product approved in Japan. You could use growth hormone, and the expected growth velocity would be around one centimeter more in growth velocity in an achondroplasia patient group. It has been very, very hard to prove that continues over time. This could be one of the reasons why you may have the kind of scientific question regarding the competitor’s data submissions.

Sure. I think that the FDA guidance and reviewing the output of that advisory committee was a recommendation that two years is a good interval to assess safety, as well as the continuation of efficacy. I think that the way to accumulate that data at two years may be somewhat flexible. I believe they don’t articulate for two specific years of placebo-controlled trials, because advisory committee concerns were expressed about keeping these kids on placebo for that long. So, there will likely be a way within the context of our current program for us to be able to accumulate a certain number of patients at two years, so that it wouldn’t impact our plan for filing.

Does that answer your question?

Yes. That’s very helpful. Thank you. And then, for TransCon hGH, based on your market research for your launch just in the approval, how do you anticipate patients switching to TransCon hGH from daily growth hormone? Should we expect a gradual ramp for when patients switch over? Or are you detecting a lot of demand from patients ready to switch that it could be more aggressive?

I think it’s important to step back before Jesper provides more insight. There’s a good reason why we made two Phase 3 trials. One Phase 3 trial included naive patients; the high trial was a major part of our regulatory filing related to both efficacy and safety, but we also made a switch trial that had the same number of patients because we want to prove that we can safely switch patients coming from established daily growth hormone therapy. We did this to ensure that the physician will have sufficient knowledge and understanding and see the benefit of what they couldn’t achieve by taking new patients as well as switching patients. You also have to remember that the majority of patients are idiopathic growth hormone deficiency. They will currently only be in treatment about three to four years before they go out of treatment, meaning the entire patient population will recycle in less than three to four years. Jesper, can you comment on the expected focus on the switch patients?

Absolutely. First and foremost, it will be a push-pull strategy from our side. We expect that new patients, those who are newly diagnosed, will be the first ones we will hopefully put on lonapegsomatropin. Then we will also see switches. Switches, very much, also depend on the market access. We anticipate getting gradual market access as we enter the market based on negotiations with PBMs and health plans, but we certainly believe that for new patients, it is a great start. Regarding current patients well-established on growth hormone, it’s less likely that we see them switch unless we procure the kind of market access that we aim for, and I believe this strategy will work with an innovative way of treating patients going forward. I have spent more than 30 years in this area; the colleagues we have also have a strong background in not only growth hormone but also in endocrinology. From market access to sales and marketing, everyone is in place operation. So, we will be up and running in the not-too-distant future. And I cannot wait until the end of next year.

Thank you. Our next question comes from Tazeen Ahmad with Bank of America. You may proceed with your question.

Hi. Thanks so much for taking my questions. Good afternoon, guys. I wanted to get your thoughts on how you’re thinking in general about receptivity to pricing. So, for growth hormone, you’ve obviously demonstrated with clinical data that you are superior to daily treatment. With that in mind, I would ask why wouldn’t you want to price at a premium to daily growth hormone? And then I have a follow-up.

I think that question is so clear that Jesper will take it.

Of course, pricing is what it boils down to, but it’s not the whack price, meaning the list price that we are going to aim for. It’s the net price that is of true interest here. We will make that decision at the time of product approval before the launch. Of course, we have a superior product, and you would anticipate through demand a superior price. I have never seen Apple introducing a new phone that was cheaper than the previous phone they put on the market.

Okay. So with that in mind, how long do you think it will take for the switch patients to convert to your product? I would assume that for new patients, doctors would prescribe TransCon right away. But for the current market, can you talk to us about what you think the potential dynamics would be for anybody who might be comfortable with daily treatments, whether be the parents or the referring physicians? How should we be thinking about that? Thanks.

The patient dynamics are such that you switch all patients through a cycle in three years to four years. So, if you talk about switching and the impact on patient dynamics, this is something that will affect revenue in the first two years. We believe that Jesper has done everything to ensure the company is prepared for this switch. Some patients that do not see the desired outcomes with daily growth hormone will be first in line for switching to our product.

I would also like to add, one must consider the parent and child perspective. For many patients, it’s a daily challenge to inject their growth hormone, and therefore, to be given the opportunity to administer it once-weekly is what the market has been craving for a long time. Over the 30 years I’ve been in this industry since I sold my first growth hormone, I firmly believe that once-weekly is what patients desire.

Thank you. Our next question comes from David Lebovitz with Morgan Stanley. You may proceed with your question.

Thank you very much for taking my questions. Given that there are other long-acting products out there for growth hormone, they did not achieve superiority. How are the communications ongoing right now with the community about those products? How viable are they as competitors in your mind? And also with respect to growth hormone, clearly, the adult data is coming up at a subsequent point, but is there some level of inquiry on that and potential for off-label use in that population ahead of data in adults?

I think you need to separate the two different indications, growth hormone deficiency in children, and adult growth hormone deficiency. The doses you're using are completely different; four to five times higher in the pediatric indication. The demographic and the course of the disease is distinct. The demographics comprise a majority of patients who are diagnosed with idiopathic growth hormone deficiency. If we consider adults, that could derive from trauma, oncology, and other elements. Regarding competition, as Jesper said, we not only have the first entry into the market but we also know that we possess the best-in-class product in the pediatric segment, which makes up 90% of the entire market. The only product coming after us will be marketed by Opko/Pfizer, which is a few years behind its anticipated launch. Even the product has already been proven to fail within their Phase 3 trials in adults with growth hormone deficiency, showing that it cannot reach the desired tissue distribution, with no other growth hormone product ever having failed in such trials. That, in itself, raises questions.

So far, we haven’t seen any long-acting growth hormones on the market. We are still waiting for that. But in terms of success in this industry, the first thing is hiring people with the right background, as it’s all about the employees and their vision. Next is maintaining the reputation of the company, which we achieved due to our three products now in our pipeline for endocrinology. Practitioners will recognize we are not here for a short term but for the long haul, thus, becoming the partner of choice for endocrinology. First, our product needs to be excellent, and we are offering a somatropin, a 191 amino acid compound that stands out in a once-weekly setting. So, I see ourselves in the best possible position when introducing our growth hormone after June 25 next year.

Thank you. Our next question comes from Jim Birchenough with Wells Fargo. You may proceed with your question.

Yes. Hi guys. Congrats on all the progress. I guess a couple from me, or maybe a two-part. Just on manufacturing, could you maybe just give us some comfort on your level of confidence in the manufacturing? We’ve seen in other areas that manufacturing can come up late in the review cycle, and so, what can you share with investors to ensure that this won’t happen in this case? And then, as for the commercial launch, what’s the frequency at which patients typically see their physicians? Do you have some benchmark for expected switch rates? Are there other products that have had similar differentiation that you could benchmark against to say we expect a 50% switch like enhanced products in Europe or 90% switch like Darzalex subcutaneous? What’s your benchmark for that?

Jim, you’re right when you see the stream of CMC problems, and that issue often arises at the end of the filing. We actually took the necessary precautions. The most important is you secure the same manufacturing site, the same process, and the same scale between Phase 3 and launch. By doing this, you prove that the patients are exposed to exactly the same compound that will be launched. By doing this, we can avoid 90% of the discussions about potential issues later on. The last 10% reflect the manufacturing plan; we are determined to meet the capabilities, systems, and quality systems required for a biological product. All of the information we have suggests we will not experience CMC issues during regulatory approval. Regarding patient switching, this will impact revenue within the first three years to four years because the entire patient population will cycle. We believe that some patients who seek superior performance will be able to switch successfully to the new treatment.

One has to consider the larger segment models for guidance. When I think about switch rates, the GLP-1 segment comes to mind, where you can see once-daily and once-weekly. In our market, we will likely see a mix of switching. We have the differentiation in our product and the ease of administration through the auto-injector, and the current market consists of seven players in the daily segment. The competitive landscape is changing significantly as we currently observe some companies withdrawing their presence in this segment. The presence of our experienced team provides us with confidence to execute effectively upon our goals. So, the question is not about whether we can succeed; it’s about how fast we can achieve those goals. Our priority will remain on net patient benefits as we recognize market demand.

Thank you. Our next question comes from Alethia Young with Cantor. You may proceed with your question.

Hey guys. Thanks for taking my question. I just wanted to discuss the PTH feedback that you’ve been hearing from experts and KOLs as you disseminate the information. And what do you think are some of the challenges from an educational focus and providing clarity to the physician population?

I think that the feedback we’re getting indicates that for the first time in their experience, there’s a potential really to help patients where they have suffered from short-term symptoms, having an extremely low quality of life. I’m not just talking about long-term risk; we see patients returning with a quality of life that can manifest significant improvements alongside treatment. We already see evidence of this in the SF-36 metrics where the quality of life starts to improve significantly, indicating why 40% of the patient population cannot work. This clearly demonstrates restoration of normal physiological levels through hormone replacement—ultimately providing them with greater access to quality care.

Yes, definitely. And for the IND amendment with the FDA for the PaTHway Phase 3 clinical trial, can you remind us what the details are surrounding this amendment?

We submitted the amendment to the FDA, and we are waiting for them to give us their feedback. While it was based upon the communications we had with them, I think there are still a few details that need clarification, but nothing substantial regarding our commitments.

Okay, great. Thanks.

Thank you. Our next question comes from Leland Gershell with Oppenheimer. You may proceed with your question.

Hey, thanks for taking my question. I wanted to inquire about the IND filing in achondroplasia in China. What do you see as the accessible market opportunity, or what does VISEN see for the Chinese market for CNP?

Yes, there are two primary reasons for our initiative. Firstly, we want to ensure the benefits reach the patient population in China who have achondroplasia. Secondly, it accelerates our program because we have access to a large centralized patient population, allowing us to quickly recruit numerous subjects into our second Phase 2 trial at an optimal dose. From this, we take a strategic decision to partner with VISEN Pharmaceuticals, which gives us leverage to commercialize all our endocrinology product opportunities in Greater China, thereby handling a large market segment.

Thank you. And regarding the Phase 3 trial for growth hormone—I understand that it’s been running for about a year now. Can you provide any updates on its progress?

This is going exactly as planned, and it is structured as a copy of our high trial with 150 patients using the same randomization and endpoints. Currently, more than half of the patients for the entire trial have enrolled.

Alright. Great. Thank you very much for taking my questions, and congrats on the great progress.

Thanks.

Thank you. Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.